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    Shills and snipes

    Bose, S. and Daripa, Arup (2017) Shills and snipes. Games and Economic Behavior 104 , pp. 507-516. ISSN 0899-8256.

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    Abstract

    Online auctions with a fixed end-time often experience a sharp increase in bidding towards the end ("sniping") despite using a proxy-bidding format. We provide a novel explanation of this phenomenon under private values. We show that it is closely related to shill bidding by the seller. Late-bidding by buyers arises not to snipe each other, but to snipe the shill bids. We allow the number of bidders in the auction to be random and model a continuous bid arrival process. We show the existence of late-bidding equilibrium. Next, we characterize all equilibria under a natural monotonicity condition and show that they all involve sniping with positive probability. We characterize the time at which such late bidding occurs and discuss welfare implications.

    Metadata

    Item Type: Article
    Keyword(s) / Subject(s): Online auctions, correlated private values, last-minute bidding, sniping, shill bidding, random bidder arrival, continuous bid time, continuous bid arrival pro- cess
    School: Birkbeck Schools and Departments > School of Business, Economics & Informatics > Economics, Mathematics and Statistics
    Depositing User: Arup Daripa
    Date Deposited: 18 May 2017 08:55
    Last Modified: 04 Dec 2018 01:10
    URI: http://eprints.bbk.ac.uk/id/eprint/18741

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